Emissions Trading and WTO Law

Emissions Trading and WTO Law

A Global Analysis

Felicity Deane

Emissions Trading and WTO Law examines the global trade issues that arise as a result of the introduction of emissions trading frameworks. The book focusses specifically on the rules of the WTO, as a tool to demonstrate where the boundaries exist for acceptable interference with international trade. In doing so, Felicity Deane addresses the thorny issue of the potential global impact of emissions trading frameworks.

Chapter 2: Contextual elements of emissions trading

Felicity Deane

Subjects: law - academic, environmental law, international economic law, trade law


Emissions trading schemes represent one of the most popular instruments for pricing greenhouse gas (GHG) emissions. These schemes are the subject of analysis within this book. To begin, the purpose of this chapter is to provide a synopsis of some of the important features of these schemes. This is done in four distinct sections. The chapter begins with an overview of some of the theories to justify the introduction of emissions trading schemes. The theories enable an understanding of some of the aspects of the legal frameworks along with providing some significant background information. The mechanics of emissions trading can be somewhat complicated and the information provided here is far from comprehensive. The second part of this chapter includes a basic explanation of the markets and the different types of tradable instruments associated with emissions trading schemes. This is an essential part of the chapter as it provides important context to the analysis of the legal status of tradable instruments that follows in later chapters. There have been a number of emissions trading schemes introduced throughout the world. This has followed the inclusion of international emissions trading (IET) as a mechanism within the international climate change regime. This mechanism provides a means to account for, and encourage the reduction of, each nation’s GHG emissions. Through the IET and other flexible mechanisms the international climate change regime has encouraged the introduction of regional and domestic emissions trading schemes.

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